A pre-tax charge of $14.9 million ($9.2 million after-tax), or $0.13 per diluted share, was recorded in the first quarter of 2017, related to the settlement of a previously disclosed legal matter. The impact of the legal charge was partially offset by a pre-tax charge recorded in the first quarter of 2016 of $5.5 million ($3.4 million after-tax) related to a separate legal matter which had an impact of $0.05 on diluted earnings per share;

Diluted earnings per share increased 3.1% to $1.01 from $0.98 in the prior year; and

13 company-owned restaurants were opened, including two Bubba's 33 restaurants.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, "We are pleased with our results for the second quarter highlighted by double-digit growth in both revenue and diluted earnings per share. In addition, our comparable restaurant sales growth, driven by traffic gains, continues to be solid with an increase of 4.6% for the first four weeks of the third quarter. We are on track to open 27 to 29 company restaurants this year. Looking ahead, we remain focused on our long-term growth potential as we continue to fill our new
restaurant pipeline for next year and beyond. Finally, the strength of our balance sheet and cash flow allow us to internally fund our new restaurant growth and return excess capital to shareholders through dividends and share repurchases."

2017 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our third quarter of fiscal 2017 increased approximately 4.6% compared to the prior year period.

Management updated the following expectations for 2017:

27 to 29 company restaurant openings, including approximately four Bubba's 33 restaurants compared to previous guidance of approximately 30 company restaurants, including approximately six Bubba's 33 restaurants; and,

An income tax rate of approximately 28.0% compared to previous guidance
of 29.0% to 30.0%.

Management reiterated the following expectations for 2017:

Positive comparable restaurant sales growth;

Food cost deflation of approximately 1.0% to 2.0%;

Mid-single digit labor inflation; and,

Total capital expenditures of approximately $170.0 million, excluding any cash used for franchise acquisitions.

Conference Call

The Company is hosting a conference call today, July 31, 2017 at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 334-3032 or (719) 457-2619 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (844) 512-2921 or (412) 317-6671 for
international calls, and use 3626432 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates 535 restaurants system-wide in 49 states and six foreign countries. For more information, please visit the Company's Web site at www.texasroadhouse.com.

Forward-looking Statements Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated financial performance, are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, the actual number of restaurants opening; the sales at these and our other company and franchise restaurants; changes in restaurant development or operating costs, such as food and labor; our ability to acquire franchise restaurants; our ability to integrate the franchise restaurants we acquire or other concepts we develop; our ability to continue to generate
the necessary cash flows to fund our new restaurant growth, continue our share repurchase program and pay a quarterly cash dividend; strength of consumer spending; pending or future legal claims; breaches of security; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; food safety and food-borne illness concerns; acts of war or terrorism and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update any forward-looking statements.

Current maturities of long-term debt and obligation under capital lease

176

167

Other current liabilities

246,032

279,360

Long-term debt and obligation under capital lease, excluding current maturities

52,291

52,381

Other liabilities

91,361

89,821

Texas Roadhouse, Inc. and subsidiaries stockholders' equity

797,388

750,226

Noncontrolling interests

12,033

8,016

Total liabilities and equity

$

1,199,281

$

1,179,971

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

26 Weeks Ended

June 27, 2017

June 28, 2016

Cash flows from operating activities:

Net income including noncontrolling interests

$

75,202

$

71,862

Adjustments to reconcile net income to net cash
provided by operating activities

Depreciation and amortization

45,702

39,777

Share-based compensation expense

12,365

11,703

Other noncash adjustments

(1,842

)

(493

)

Change in working capital

(3,119

)

(8,781

)

Net cash provided by operating activities

128,308

114,068

Cash flows from investing activities:

Capital expenditures - property and equipment

(73,637

)

(69,159

)

Acquisition of franchise restaurants, net of cash acquired

(16,528

)

-

Net cash used in investing activities

(90,165

)

(69,159

)

Cash flows from financing activities:

Proceeds from revolving credit facility, net

-

25,000

Repurchase shares of common stock

-

(4,110

)

Dividends paid

(28,308

)

(25,277

)

Other financing
activities

(6,271

)

(4,551

)

Net cash used in financing activities

(34,579

)

(8,938

)

Net increase (decrease) in cash and cash equivalents

3,564

35,971

Cash and cash equivalents - beginning of period

112,944

59,334

Cash and cash equivalents - end of period

$

116,508

$

95,305

Texas Roadhouse, Inc. and Subsidiaries

Supplemental Financial and Operating
Information

($ amounts in thousands, except weekly sales by group)

(unaudited)

Second Quarter

Change

Year to Date

Change

2017

2016

vs LY

2017

2016

vs LY

Restaurant openings

Company - Texas Roadhouse

5

6

(1

)

11

11

0

Company - Bubba's 33

2

1

1

2

3

(1

)

Company - Other

0

0

0

0

0

0

Franchise - Texas Roadhouse - U.S.

0

0

0

1

0

1

Franchise - Texas Roadhouse - International

0

1

(1

)

1

2

(1

)

Total

7

8

(1

)

15

16

(1

)

Restaurant acquisitions/dispositions

Company - Texas Roadhouse

0

0

0

4

0

4

Company - Bubba's 33

0

0

0

0

0

0

Company - Other

0

0

0

0

0

0

Franchise - Texas Roadhouse

0

0

0

(4

)

0

(4

)

Total

0

0

0

0

0

0

Restaurants open at the end of the quarter

Company - Texas Roadhouse

428

403

25

Company - Bubba's 33

18

10

8

Company - Other

2

2

0

Franchise - Texas Roadhouse - U.S.

70

72

(2

)

Franchise - Texas Roadhouse - International

14

12

2

Total

532

499

33

Company-owned restaurants

Restaurant sales

$

562,160

$

504,630

11.4

%

$

1,125,480

$

1,015,914

10.8

%

Store weeks

5,775

5,350

7.9

%

11,456

10,612

8.0

%

Comparable restaurant sales growth (1)

4.0

%

4.5

%

3.6

%

4.5

%

Texas Roadhouse restaurants only:

Comparable restaurant sales growth (1)

4.1

%

4.5

%

3.7

%

4.5

%

Average unit volume (2)

$

1,274

$

1,233

3.3

%

$

2,575

$

2,506

2.7

%

Weekly sales by group:

Comparable restaurants (389 units)

$

98,689

Average unit volume restaurants (23 units) (3)

$

85,958

Restaurants less than 6 months old (16 units)

$

105,972

Restaurant operating costs (as a % of restaurant sales)

Cost of sales

32.9

%

34.0

%

(106

)

bps

32.8

%

33.9

%

(111

)

bps

Labor

31.1

%

29.7

%

133

bps

30.6

%

29.3

%

136

bps

Rent

2.0

%

2.0

%

(4

)

bps

2.0

%

2.0

%

(4

)

bps

Other operating

15.1

%

15.0

%

5

bps

15.1

%

15.1

%

4

bps

Total

81.1

%

80.8

%

28

bps

80.6

%

80.3

%

25

bps

Restaurant margin (4)

18.9

%

19.2

%

(28

)

bps

19.4

%

19.7

%

(25

)

bps

Restaurant margin ($ in thousands) (4)

$

106,455

$

96,994

9.8

%

$

218,706

$

199,965

9.4

%

Restaurant margin $ (4)/Store week

$

18,434

$

18,130

1.7

%

$

19,091

$

18,843

1.3

%

Franchise-owned restaurants

Franchise royalties and fees

$

4,102

$

4,178

(1.8

)

%

$

8,468

$

8,453

0.2

%

Store weeks

1,092

1,088

0.4

%

2,172

2,157

0.7

%

Comparable restaurant sales growth (1)

2.9

%

2.6

%

3.0

%

2.8

%

U.S. franchise restaurants only:

Comparable restaurant sales growth (1)

3.6

%

4.3

%

3.8

%

4.2

%

Average unit volume (2)

$

1,321

$

1,265

4.4

%

$

2,644

$

2,552

3.6

%

Pre-opening expense

$

5,014

$

4,411

13.7

%

$

9,754

$

9,236

5.6

%

Depreciation and amortization

$

23,106

$

20,238

14.2

%

$

45,702

$

39,777

14.9

%

As a % of revenue

4.1

%

4.0

%

10

bps

4.0

%

3.9

%

15

bps

General and administrative expenses

$

28,223

$

26,711

5.7

%

$

68,471

$

56,771

20.6

%

As a % of revenue

5.0

%

5.2

%

(27

)

bps

6.0

%

5.5

%

50

bps

(1) Comparable restaurant sales growth reflects the change in year-over-year sales for restaurants open a full 18 months before the beginning of the period measured, excluding sales from restaurants closed during the period.

(2) Average unit volume includes sales from Texas Roadhouse restaurants open for a full six months before the beginning of the period measured, excluding any sales at restaurants closed during the period.

(3) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period measured.

(4) Restaurant margin (in dollars and as a percentage of restaurant sales) represents restaurant sales less restaurant
operating costs, including cost of sales, labor, rent and other operating costs. Depreciation and amortization expense, substantially all of which relates to restaurant-level assets, is excluded from restaurant operating costs. Restaurant margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. Restaurant margin is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.